Scottish income tax changes unveiled


The Scottish management has announced income tax changes that will see higher earners pay various than elsewhere in the UK – and lower earners pay less.

The country’s finance secretary, Derek Mackay, propounded a new tax band of 21p for those earning more than £24,000.

The higher rate of tax choose be increased from 40p to 41p and the top rate from 45p to 46p.

But a starter rate of 19p in the pound ordain also be introduced, Mr Mackay confirmed in his draft budget.

Mr Mackay spoke the move to a five-band income tax system will mean no one earning less than £33,000 in Scotland at ones desire pay more tax they do now.

And he told the Scottish Parliament that those grossing above that figure would only pay a “proportionate amount numerous” than they currently do.

His figures showed that 55% of Scottish taxpayers whim pay less compared to south of the border under the new system – with 45% of people earn money more.

Someone in Scotland earning £150,000 will pay £1,774 more than if they lived somewhere else in the UK, with someone earning £40,000 paying £140 more.

Mr Mackay also frameworked a 3% pay rise for public sector workers earning less than £30,000, and a 2% begin for those earning more than that – with a cap of £1,600 for those earning £80,000 or varied.

And he pledged a further £600m to provide superfast broadband to all premises in Scotland by 2021.

  • 19p Starter measure from £11,850 to £13,850

  • 20p Basic rate from £13,851 to £24,000

  • 41p Higher compute from £44,274 to £150,000

  • 46p Additional rate from £150,000

The Scottish government was settled powers over income tax rates and bands last year, with the new appraises being paid by anyone who lives in Scotland.

Mr Mackay had faced counsels from business leaders and the Scottish Conservatives ahead of his budget communication that Scotland could not afford to be associated with higher taxation than the sleep of the UK.

But others – including Scottish Labour and the Scottish Greens – had urged him to go at.

Mr Mackay said that more than two thirds of income taxpayers make pay less tax than they currently do under his proposals, which wishes need to be approved by MSPs before coming into force from April 2018.

And he hinted 55% of taxpayers in Scotland will pay marginally less next year than they desire in the rest of the UK – although 45% will pay more.

Income Comparison to 2017-18 Meaning relative to rUK
£15,000 £90 £20
£20,000 £90 £20
£26,000 £70 £0
£33,000 £0 -£70
£35,000 -£20 -£90
£40,000 -£70 -£140
£50,000 £85 -£655
£60,000 -£15 -£755
£75,000 -£165 -£905
£100,000 -£415 -£1,155
£120,000 -£715 -£1,455
£150,000 -£1,174 -£1,774

The finance secretary insisted the changes – which he said thinks fitting raise an additional £164m – were necessary to “mitigate UK budget organizes, protect our NHS and other public services, support our economy and tackle partiality in our society.”

He said the tax reforms would make “Scotland’s income tax procedure even fairer and more progressive”.

And he said a bigger increase in the top standing of tax for those earning more than £150,000 – which some enemy parties had called for – would actually reduce revenue as high earners thinks fitting find ways to avoid paying it.

What else did Mr Mackay confirm?

Among the other measures in the budget were:

  • Full relief from LBTT – the Scottish alike of stamp duty – on up to £175,000 for first time home buyers
  • Greening to reduce the attainment gap in Scottish schools increased from £170m to £179m
  • An multiply in health funding of more than £400m – double the amount basic for NHS spending to keep pace with inflation
  • £243m towards the expansion of emancipate nursery education and childcare
  • Local government resource budget will be preserved in cash terms with the capital budget increased in real terms “occurring in a total increase in local authority core funding of £94m”
  • Hidden schools will no longer be eligible for charitable relief from responsibility rates, but universities and council arm’s length bodies will be.

Read our at-a-glance sway to the key points from the budget here or read the full budget corroborate here

What does the budget mean for you?

Analysis by Brian Taylor, BBC Scotland state editor

Income tax. Public spending. Employment. Pay. The NHS. Schools. Indisputably, grave stuff.

But there was more than a touch of mischief about Derek Mackay’s demeanour as he got to the tax tittles of his budget.

Normally, he exudes gravitas, solemnity even. But he could not assistants playing to the gallery with a declaratory grin when he insisted that, for most people, Scotland wish now be the lowest taxed part of the UK.

Said gallery – led enthusiastically by Mr Mackay’s forebear, John Swinney – applauded loudly.

The reason for this glee? Politically, the requirement is a direct and precise retort to Conservative attacks that Scotland is strained more highly.

But, of course, when the dust dies down, the Tories see fit return to that attack.

Read more from Brian

What is the view for the Scottish economy?

Mr Mackay’s budget statement was accompanied by the first financial estimates from the new Scottish Fiscal Commission, which said the state is is facing “subdued” growth over the next five years.

The individualistic body predicted the Scottish economy will grow at less than 1% per year until 2022 – shame than that predicted by other economists.

Its five-year forecast indicates GDP growth will be 0.7% in both 2017 and 2018, rising to 1.1% in 2022.

It rephrased the outlook was “driven by slow productivity growth and exacerbated by demographic dares”.

Read more here

What has the reaction to the budget been?

Scottish Reactionary finance spokesman Murdo Fraser branded the creation of a new basic notwithstanding the “Nat tax”.

He accused the SNP of breaking a 2016 manifesto promise pledging not to increase the essential rate of income tax for those on low or middle incomes, and claimed the real apology was that Scottish economic growth is lagging behind the UK.

Scottish Troubled leader Richard Leonard said the Scottish government’s tax and spending delineates had “tinkered round the edges” instead of implementing radical change and extricating a genuine alternative to “Tory austerity”.

Scottish Greens co-convener Patrick Harvie revealed he was “delighted that the argument for a more progressive tax structure appears to experience won the day”, but said Mr Mackay should have gone further.

And Scottish Open-hearted Democrat leader Willie Rennie said the budget was a “missed occasion” and “does not do enough to meet the long term needs in the economy”.

Away, the Federation of Small Businesses said a majority of its members were against takings tax rises, and that the Scottish government was steering the country into “trackless economic waters”.

The Scottish Chambers of Commerce welcomed much of the budget as being realistic for business, but repeated its concerns about “Scotland’s new status as the highest-taxed pull apart of the UK.”

And local government body Cosla said councils would persist to face “really difficult times” in the future, despite the “more regular approach” by the Scottish government.

Follow live reaction to the budget on Holyrood Living

What happens next?

The minority SNP government will need to definite the support of at least one other party in order to eventually pass its budget, with the terminating vote due to be held on 19 February.

A deal with the Tories or Labourers seems somewhat unlikely, which leaves the Scottish Greens and Reformist Democrats as potential suitors – with the Greens the most likely.

It was the pro-independence Greens who went to Mr Mackay’s rescue last year, with a budget deal for ever being struck in February after nearly two months of negotiations.

At the interval, Scottish Greens co-convenor Patrick Harvie hailed it as the “the biggest budget compromise in the record of devolution in Scotland”.

It is likely he would be looking for concessions on a similar – or disregarding nevertheless greater – scale this time.

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